Earlier this month, the UK Court of Appeal confirmed that brand owners can obtain website blocking orders against Internet Service Providers (ISPs) to combat the online sale of counterfeit goods. This is great news for brand owners which are vulnerable to online counterfeits, since it allows them to take action against the ISPs providing access to the Internet and therefore the infringing site, rather than having to pursue the website operator itself who could be difficult to identify or based in another jurisdiction. However, it is perhaps not such positive news for ISPs who will bear the burden, and the costs, of implementing website blocking orders.
The claimants were Cartier International, Montblanc-Simplo, and Richemont International, and the defendants were five ‘household name’ ISPs: British Sky Broadcasting, British Telecommunications, EE, Talktalk Telecom, and Virgin Media. Although blocking orders have been granted in copyright infringement cases for some time, this case confirms that the Court has the power to grant them in respect of trademark infringement too. The Court emphasised that its discretion to make such orders was broad, so it is likely to extend to other intellectual property rights as well.
The Court acknowledged that the ISPs are not guilty of any wrongdoing; they themselves do not infringe trademarks by providing Internet services which give consumers access to websites selling counterfeit goods, and there is no obligation on ISPs to monitor for IP infringements online. However, the operators of infringing websites require the services of ISPs to offer for sale, and sell, their counterfeit goods to customers and in this way the ISPs are essential actors in the infringing activity.
ISPs to bear costs of blocking measures
There are some safeguards for ISPs, in that blocking orders must be fair and proportionate and must not be unnecessarily complicated or costly for the ISP. One of the most contentious issues in this case was who should bear the cost of implementing these blocking measures, with ISPs strongly resisting arguments that it should fall to them. It was, however, decided by a majority of two to one in the Court of Appeal that the ISPs should bear the costs of implementing the blocking measures.
Whether this will in fact place a significant financial burden on ISPs remains to be seen – the technical processes for blocking websites on the Internet are already in place for other types of undesirable content, but extending and maintaining these processes may well put a strain on ISPs’ resources.
Of course, the ISPs may choose to pass on any additional costs to their subscribers in the form of higher subscription charges – which will be bad news for the average consumer. However, the Court of Appeal did make it clear that there may be individual instances where the brand owner will have to pay, for example if the Court decides that the cost burden on the ISP in any individual case is disproportionate. Brand owners will, however, naturally bear the costs of gathering evidence of infringing websites, making the application for a blocking order and ongoing monitoring of the situation in order to provide updates to the ISPs as to where infringing sites are popping up.
The bigger picture
Despite the possible burdens on ISPs, the bigger picture is of course that counterfeiting is undesirable and damages the legitimate marketplace, in particular for luxury goods. Brand owners vulnerable to counterfeiting are caught in a constant struggle to protect their sales and reputation, as well as consumer confidence in their market. We have seen that blocking orders for copyright infringements have significantly decreased illegal film streaming in the UK (and do not appear to have caused any major disruption to ISPs). Such orders in respect of trademark infringement should, in theory, be no more difficult to implement. Therefore, if ISPs and rights holders can work together to combat counterfeiters, as clearly envisaged by the UK Courts, this should have a positive impact in combating a growing market for counterfeit goods.
Elaine O’Hare, Senior Associate and Raveen Sagar, Trainee at Stevens & Bolton LLP